Was The Xbox Price Cut Needed?

Gerson Lehrman Group is wondering if the timing of the Xbox 360 price cut was too early, or if the cut was even necessary. They reason that a cut is needed if your product has something to gain, but with Sony's still-too-expensive console, Nintendo's regardless of the industry sales, Halo 3 and the 360 Elite, Microsoft didn't gain much at all.

I don't think it was a "NEED" type of decision that Microsoft was facing when they opted for a price cut.

I think they've gotten console production down to the point where they can honestly AFFORD to cut the price.

Now, I KNOW what has been said about them not turining a profit until next year, but this price cut was just a strategic move to get the consumer familiar with their new price point before the Holiday season.

There will be a TON of deals and bundles flying around when the holiday season arrives, so if the Xbox360 is priced NOW, people will avoid a lot of the confusion, and be able to make an Xbox360 purchase without fear that a new crazy deal will under-cut the one they just made.

Microsoft saw that the PS3 sales were picking up a bit, and decided to halt them in their tracks before they got any momentum. It's all strategy. Kick 'em while they're down.

With the $50 price cut and Halo 3 coming next month, they Xbox360 is GUARANTEED to see a sales spike that will carry them through the Hilodays

The mega drive had a big headstart. But the Super nintendo had an excellent opening start. and soon caught up. There was fiece competition and none of the consles won and the war went on for many year (4 years). eventually the Super Nintendo won the war and even in the 32 bit error it was a fierce rival - Wikipedia

It's never too early for a price drop. Besides Microsoft just made it harder for Sony... and proved that they can always drop the price if they wanted to... even after many people though they were not going to do it.. due to the 1.2 Billion bill they had to pay for RROD issues. I think the price drop did help microsoft... it's the reason why Sony was not able to beat the xbox 360 (NPD) on the month of July. Without this price drop... the PS3 would have taken the month of July.

Dropping the price is bad now? Geez this console business is confusing. This is an idiotic article and I love this quote "some others will argue it was not needed because of the future Halo 3 release and the recent Elite version announcement."

First off recent elite version announcement? um ok enough said. and oh APPARENTLY it's BAD now to drop the price of your console before your biggest game releases. I mean duh you wouldn't want to make the console more affordable to maximize sales as much as possible. Silly me how could I get that so backwards!?

You can get all sorts of angles from different people about whether the price cut was good for Microsoft or not, but remember........Microsoft knows what they are doing. Small price cut or not, strategically, it is working. The most popular 360, got a 50 dollar cut, and that is huge. The core only got a $20 cut, but it is the fact that a next gen beast like the 360 can be purchased for only $30 more than a Wii, even if you are missing the hard drive. And the elite....well, let's just say even I bought an elite when the price cut came, so even small discounts work. And oh yes, the elite is all that and a bag of Scooby snacks! Now, back to Bioshock!

I think you will see that people are generally more interested in the latest in hardware than price. When the 360 drops low its already an old console. They will have a hard time selling hardware altough hardcore gamers will hang on knowing they will get a cheaper console that offers the games they want. However this will not sell hardware. Nintendo is "new", and a greater buy for casual gamers. Sony PS3 will sell allot, even though it is more expensive because its the latest console and offers more than just gaming. Being more versatile and with a 100 pricedrop it will sell very well indeed.

SPENSER- That's quite an interesting theory, although uneducated and unrealistic. I believe original statement above is one of dilusion. Just do some market research next time to avoid looking like an ignorant jacka$$.

BLAZIN- Good point... I don't expect SPENSER to have much of a response to your PS2 argument.

price drop needed of couese, ms needed to drop the price so they can sell out current red ring plagued 360's so they can introduce the falcon equiped 360's sooner to put this problem behind them, smart mve for ms!

MS has set themselves up for gigantic class action lawsuits. once they admitted to the problem, the clock started ticking. Anyone that bought a 360 after that announcement and has one die on them can sue the crap out of MS for KNOWINGLY selling a defective product. a 10 year warranty wouldn't make any difference since you are still technically committing fraud. All it takes is for the right combination of events to go down and you could see MS hightail it out of the console business like it's ass is on fire.

a Price-cut always benefits the consumers, so I wouldn't think anybody would complain about a price-cut. If you do, youprobably think your ocnsole of choice is so superiror it doesn't need one, and I have seen that on here. Stupid!!!

Yes the 360 was out the longest before cutting it's price, but I'll say, that the Measly $50 price-cut was really not needed. The reason is, this price-cut comes at a time when MS could of maximize it's revenue becasue of the high-profile games coming out this time of year.(IMO would of boost sales)

With the rumored code-name "falcon" chips coming out, to put gamers on the fence at ease, the larger gaming library out of all next-gen consoles, including some bargin bin games after 2 years or so, and some of the high-profile games coming out(some proven, some not), MS could have kept the prices where they were.

If it was $100 price-cut then we really could of seena big difference becasue now, a gamer can buy a Core/Premium/Elite and still have money for like 2 games and a controller. Unlike sony, for which thier Price-cut clearance, whatever you wanna call it, was the only reason their sales went up significantly, with a little help from E3 and the promise of AAA titles this fall, while the price will go back to $600, with a Bargain bin 1-year old game.

MS has been selling steady for almost 2 years on a lot of factors not having price be the biggest factor, when competition arrived Nov 2006.

Xbox fans BUY GAMES & ACCESSORIES. Simple as that. So yeah Price-cut was not really needed but with a $100 drop,(being what it is $50) it could of had more punch. IMO

Wait to be seen which games will push consoles this holidays. The same goes for the PS3 and Wii. Since there are no more price-cuts to boost sales. Let the games do the talking, cause I know fanboys will continue to Yap about less important things.

Did MS need a price drop? No, not after $1 billion spent on warranty extensions. It was something they had to do. Sometimes you have to do things that you don't necessarily need. People do pay attention to price. I think MS is hoping that a lower price coupled with the warranty extension and some AAA games coming up will translate to a revitalization in sales. The rest of this year will be very interesting.

The Microsoft price cut was very small, though, so it's not that big of a deal. There were reasons for the small price cut now, though, and it was a good move.

a $20 price cut on the core doesn't lower it to the level of the Wii. As deep as Microsoft's pockets are, Bill Gates has to know he can't get into a price war with Nintendo. If Nintendo slashed $100 off the Wii, they'd still be making profit in maybe a year when costs of making the console are down a little. The 360 has already lost them money (billions), and much more of a drop will ensure it won't be profitable this gen...already! The last thing Microsoft needs is to get into a price war with Nintendo, which they cannot hope to win.

On the other side, the $50 price cut of the Elite makes it keep its distance from the PS3, so MS can still talk about its price advantage. They know they can win a price war against Sony, and, in fact, Sony is going to have a hard time lowering the price below $500 any time soon, even with the cheaper-to-make 80 GB version on American shelves. Sony is playing Microsoft's game, now, and Microsoft smells blood.

Then, overall, a price drop just generates more demand (or quantity demanded, depending on who you ask). With many searches for "xbox 360 price cut," it's obvious that a price cut was needed to get more sales, because if people anticipate a price drop, they won't buy a product. In that way, a price drop did double of what the cut for the PS3 did, getting people who were looking for a price cut and generating interest among those who weren't.

The timing wasn't bad (though it could have been a little later, I think), and it was just the right amount. Good for Microsoft getting it just right. The thought they gained nothing from this is just wrong. I think this minor price cut for them will keep sales higher though the rest of this year. I think it is better to say it does not cut into the PS3 or Wii sales, but that does not mean the 360 sales will not be helped from the cut.

In chess, not every move is to hurt your opponet; many are to get in a better place for yourself.

Plain and simple -- it doesn't matter what you are selling. There is a price point where your product (assuming it has mass appeal) reaches a point where the majority of buyers (early adopters, leaders, and many laggards) are buying into the product. On the 360, mass majority pricing has not been reached. If the author of this article had a clue about economics relationships and market pricing, he wouldn't have written such a numbskull article. The Wii has proven that $250 is a price point that MANY, MANY people will buy into while $400 is not. Get a clue, buddy.

Microsoft wants to make sure it remains the lead platform for third party software sales, and with so many awesome titles, MS wants to make sure consumers pick them up with the 360...it's funny how these analysts don't even blink to see what impact that anything has before they get all "analytical" for lack of a better word...but I guess that's why they are so wrong half the time...and didn't see the Wii coming...I think it was the right time...if they didn't cut price, these "analysts" would say that this was the perfect time...